Heavy crude discount narrows, stays within recent range

The Canadian heavy oil discount narrowed on Friday against the West Texas Intermediate (WTI) benchmark,but remained in its tight recent range with no significant increase in takeaway capacity easing a supply build-up in the oil-producing province of Alberta.

A significant reduction in the heavy oil discount may occur by mid-year, once railways have moved a grain backlog and can handle more crude, a Calgary industry source said.

Western Canada Select (WCS) heavy blend crude for April delivery in Hardisty, Alberta, settled at $25.55 a barrel below the WTI benchmark crude price , according to Shorcan Energy brokers, compared with Thursday’s settle of $26.10.

An expected return of TransCanada Corp’s Keystone pipeline to full pressure, following a November leak, would help reduce the discount, traders have said.

Light synthetic crude from the oil sands for April delivery last traded at $3 over WTI, a smaller premium than Thursday’s settle of $4.25.